What percentage of my new business if fair, considering I'm not investing?

[$$$Hungry]

I am starting a business with my BF and his partner. The BF is starting business investing about $75-100K to get it going. He stated, regardless that I'm doing the all the work and this is going to be my "baby", I only get 10% of the profit. Leaving himself and the other partner with 33%. Now that seemed pretty low to me, but I don't know if that is extremely low or what. He also offered to pay me $1000 a week to run the business. He technically just wants to be the investor and stand back. Any feedback you can give me would be greatly appreciated. Thank you.

[Wozcreative]

You're talking only profit. Which can be years and years before it even happens. Why aren't you guys talking ownership/equity instead? Also it sounds like you're more an employee than an owner.. and any "profit" is just commission based off how good YOU do. Be an investor and stand back ey? Sounds like he's never invested in a business before. That's not how you should do it.

Will you have the capabilities to decide where and how the money is being used? He needs to be involved just as much as you do, but probably on a different level. If you're opening up a business.. like a shoe store.. he should be the one dealing with the building relationships with wholesalers, managing your marketing, online and offline, managing prices and profit calculations, and you should be focused on the location itself, the seling, the hiring etc. Unless the business is already a proven one and he is just walking in and saying hey, I'm offering some money for a small percentage of profits and equity, then yea sure.. but you are starting from 0. This sounds pre-mature thinking to me.

[rewind]

So $1000 a week + 10% or one or the other? Do you have an estimate of how much profit you're expecting to bring in each week? That would make it easier to judge what would be fair.

[Harold Mansfield]

What happens if you guys break up?
Doesn't sound like any one has any business sense here or you would be setting this business up like a business and not like a gift from a boyfriend to give you something to do.

$1000 a week + owners equity sounds like a good deal to me, however where is the other 24% going? If he and his partner get 33%, and you get 10%, that's 76%. Who gets the rest? Why aren't you in for the other 33% if you are doing all of the work?

Sounds like you don't want to rock the boat, so you are willing to accept anything. And this may be a good deal for you, I don't know.
But get it in writing so that the business is not dependent on your relationship.

[rewind]

Harold brings up a good point. It's risky enough getting into business with a family member, but a boyfriend is even riskier.

In my experience, it usually doesn't work out partnering with a relative, so as Harold said, make sure that you protect yourself.

[nealrm]

First, having your salary dependent on your relationship to your boyfriend is a very bad idea. (assuming BF=boyfriend, same goes if BF=best friend).

Addressing your question. $52,000 a year + 10% profit share to manage a business may or may not be far. It depends on the business and its size. The profit share share portion is very fair, the question is the base salary. I would check the salaries of managers in similar businesses in your area to see how that compares. You need to understand, you are not investing or risking anything on this business. If it fails you just need to find another job, you will not lose anything. Your BF and his partner are risking 75-100K, plus any other liabilities from the business. That is why your compensation is your salary and theirs is the profits.

[$$$Hungry]

Ok, let me clarify a few things so you guys can better assist me. One...My bad on the 33% that was the number in my head if we three split it equally. The BF is a very successful business man and already has been working in the e-commerce industry. He has managed to do very well and when I say well, I mean VERY well. He met someone who is brilliant in e-commerce marketing and bought into his company a while back in order to get a product he was starting to take off online. Since then, all of his products have been blowing up online. NOW, We have been together for a few years now and I asked him if he would consider helping me launch my business in the e-commerce world, (not talking clothing shops here) and I would happily run it and work my ass off at it. He knows this industry that I am in is very lucrative and the numbers they are expecting to come in monthly is around $200,000.00. Now this is where he comes in saying, if we make these numbers and you get 10%, then $20,000 a month isn't a bad deal plus I'm going to pay you $1000 a week to do all the work. They are just investing plus their marketing experience online is what I don't have experience in hence why I need them both. I did ask if and when I make this money can I buy into the company and he said that was an option. But my main concern considering this is the first time I am entering a business of this caliber is to understand if 10% plus the $1000 a week with me running the entire company is fair. The product is my name and my face. I know we are not married yet but I do want to protect myself in case. I don't want to be one of these stupid GF's who get screwed bc I didn't protect myself. And I'm not looking to screw him over either. I just want what is fair on both ends.

[Harold Mansfield]

But my main concern considering this is the first time I am entering a business of this caliber is to understand if 10% plus the $1000 a week with me running the entire company is fair. The product is my name and my face. I know we are not married yet but I do want to protect myself in case. I don't want to be one of these stupid GF's who get screwed bc I didn't protect myself. And I'm not looking to screw him over either. I just want what is fair on both ends.

Then it sounds like you already answered your own question. Get it in writing.
As far as the deal goes, there's not a whole lot I can say against it because you are coming into it with nothing. They have the experience and the money. You're in a win-win situation if things work out. If they don't, you've gained knowledge and the only thing you lose is time...that is, if you've protected your interest and responsibilities in writing.



He knows this industry that I am in is very lucrative and the numbers they are expecting to come in monthly is around $200,000.00. Now this is where he comes in saying, if we make these numbers and you get 10%,

Don't put this cart before the horse. Anytime I hear someone making projects based on an existing business on a product or service that hasn't even launched yet, I get flashbacks of the 90's. You never really know until you get it in front of consumers. So don't screw yourself based on arbitrary numbers of the best case scenario. What if it takes a year to reach your 3 month projection? What if it takes 3 years to reach $200k a month? What if it never does?


All that aside, just get it in writing. Either it's going to be successful or it's not. Either way, get your deal in writing and cover all bases.

3 things can go very badly here:

1. It could take off, but you guys don't and he screws you because you have nothing invested and nothing in writing.
2. Or it flops, and so does your relationship, and he sues you for the loss. Or his partner does.
3. Or he and his partner start having problems because of your business and now one or both of them start to resent you or each other. Especially if there are cost over runs and projections don't come true.

I know I personally would NEVER invest in a friend's girlfriend's business. It's worse than living with a couple. So this must be some special guy or he's oblivious to how badly this can all go because essentially the ROI on his time and money is not just based on the success or failure of the business, but your relationship. That's a big monkey wrench.

People act irrationally when it comes to money. You have to think with your head. Not your heart.

Going into business with your boyfriend and his friend is probably at the top of the list of "people you shouldn't go into business with", because it forces you to explore some uncomfortable "what if" scenarios that you may not have previously considered. So knowing that, treat it like a business from the ground up. Get it all in writing so that you don't end up yet another ex girlfriend in court with no rights to anything.

[$$$Hungry]

I hear you loud and clear. And from my perspective, regardless I know going into business with a bf is not a great idea, I am taking advantage of the opportunity to become successful. I have already consulted attorneys and I will treat it like a business. I just notice he avoids talking business with me bc I think he wants to have the upper hand in case anything goes bad. I will keep going forward and thanks for the advice!!!!:)

[nealrm]

Just one word of caution, it is very likely that you will end up with either a boyfriend, a business or neither. A rare few are able to keep both. If he is already avoiding talking business with you that is not a very good sign. So is this business worth losing him as a BF, given there are other ways of starting a business without his help.

[Wozcreative]

A boyfriend that doesn't want to talk business? This reminds me of all those Kitchen Nightmares episodes where the women wanted a restaurant and the husband just forked over the money and just walked away and doesn't want to face the music of why it's going bad. I wouldn't want to be in a relationship with someone who doesn't also want to share their knowledge about running a successful business with someone like myself who's inexperienced. He's not some outsider, he's a boyfriend and a business partner. Seems strange to me.

Sounds like he only wants to deal with the money aspect of it and keep you in the dark.